Northern Economist 2.0

Tuesday, 7 March 2017

The Ring of Fire: Waiting for Ignition


There was an exchange in Ontario’s Legislature yesterday between MPP Norm Miller and Minister of Northern Development & Mines Bill Mauro regarding whether or not the government would “finally take a leadership role that will make the Ring of Fire a reality in Ontario?”  The minister responded that mineral exploration activity in Ontario was climbing and progress was being made and more specifically asserted that: “there are three other mines under construction in the province. But they want to spend their time focusing on one. There’s one not too far from my home community of Thunder Bay called the New Gold project. Speaker, right now it’s under construction and 600 people are working on a construction site. When that mine is open for the next 10, 20 or 30 years of its life, there are going to be 450 people working in that mine.”

My belief is that any full-blown development of the Ring of Fire is many years away given the ongoing negotiations with First Nations, the immense cost of transportation infrastructure to access the Ring of Fire as well as the state of resource and commodity markets.  However, it is worth examining whether there has been some progress in northern Ontario’s resource sector particularly when it comes to employment generation.  Figures 1 and 2 present employment in northern Ontario’s resource extraction sector as measured by Statistics Canada series  v91415810 (Northeast) and v91415829 (Northwest) on employment in Forestry, Fishing, Mining, Quarrying, Oil and Gas presented monthly from 3rd month 2001 to 1st month 2017.  

 

The results in Figure 1 show that while there is some substantial fluctuation in resource extraction over time with some large upswings, when a linear trend is fitted to the data the long-term performance is quite flat.  Indeed, average monthly employment was 21,500 in 2001 and 21,867 in 2016 – actually a 1.7 percent increase.   

 

Figure 2 is more interesting because it separates the employment data up into northeast and northwest Ontario.  While the northeast has trended up over time, the northwest has trended down.  Average monthly resource extraction employment in the northeast was 12,470 in 2001 and 17,892 in 2016 – an increase of average monthly employment over time of about 44 percent.  Meanwhile, the northwest has seen average monthly employment in resource extraction fall from 9,030 in 2001 to 3,975 in 2016 – a decline of 56 percent. 

This is a remarkable difference in performance and likely represents the long-term impact of the forest sector crisis on the northwest – which was much more forestry intensive than the northeast – as well as the relative success of mining in the northeast relative to the northwest.  While the northwest is seeing mining activity, it has not yet been on a sufficiently large enough scale to be the employment generator it is touted to be.  I suppose we are still waiting for the Ring of Fire to be ignited.